EURAUD has been on an upward trend for the last 3 years. From January 2017 to mid-March 2020 the price increased by 5600p, although the biggest increases were recorded this year, they amounted to 3600p and ended with a maximum of 1.9780. Currently the price has reached the level of support and resistance at 1.6780 after quite intensive drops.
Looking at the H4 chart, we can identify the Head and Shoulders formations, it is not very regular and for orthodox traders it is probably unacceptable… but it meets the condition – 4 points on one line – that is, it forms a neck line (green) of this skewed Head and Shoulders.
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The chart shows that the neck line was defeated last week and any Stop Loss of sell orders should be above it and the resistance of the channel (red line), which intersecting form a point of confluence of resistance.
As I mentioned, the price is currently at the S/R level, and only its successful overcoming can be a signal for further declines. The range of the first short is around the first demand zone, that is 1.6650.
It is possible that the impulse for declines will come from the ECB meeting on Thursday (30.04) and decisions on interest rates and future monetary policy in the Eurozone.
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